Phillip Swagel, director of the Congressional Budget Office, said CBO projects the federal budget deficit to drop from $2.8 trillion in 2021 to $1 trillion in 2022 as the economy bounces back and federal spending in response to the COVID-19 pandemic dwindles.
“In our projections, which reflect the assumption that current laws governing federal taxes and spending generally remain unchanged, federal deficits nonetheless remain large by historical standards and generally increase over the next decade,” Swagel said in a statement published Wednesday.
He noted that CBO projects the deficit to rise to 6.1 percent of gross domestic product by 2032 or more than $2 trillion over the next decade.
The agency expects outlays to average 23 percent of GDP by 2032 and federal debt held by the public to fall to 96 percent of GDP by 2023 and to rise following that year.
CBO also predicts that elevated inflation will continue through 2022 due to robust demand and restrained supply in the markets for services, goods and labor.
“Real GDP (that is, GDP adjusted to remove the effects of inflation) grows by 3.1 percent this year, and the unemployment rate averages 3.8 percent. After 2022, economic growth slows, and inflationary pressures ease,” Swagel said.